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U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 14717 / November 9, 1995
SECURITIES AND EXCHANGE COMMISSION v. KEYPOINT FINANCIAL
CORPORATION and MICHAEL R. WARREN, Civil Action No. 95-6542 KN
(Ex) (C.D. Cal.)
The Securities and Exchange Commission ("Commission")
announced that on October 31, 1995, the United States District
Court for the Central District of California, entered a Judgment,
which, among other things: (1) permanently enjoins Keypoint
Financial Corporation ("Keypoint") and Michael R. Warren
("Warren") from future violations of Section 17(a) of the
Securities Act of 1933, Section 10(b) of the Securities Exchange
Act of 1934 and Rule 10b-5 thereunder, and Sections 204, 206(1)
and 206(2) of the Investment Advisers Act of 1940; and (2) orders
Keypoint and Warren to disgorge all investor funds, together with
prejudgment interest. Keypoint and Warren consented to the entry
of the Order without admitting or denying the allegations in the
Commission's Complaint.
The Complaint alleges that from approximately January 1991
through at least December 1992, Keypoint, a registered investment
adviser, located in Los Angeles, through its principal and sole
control person, Warren, advised seven of Keypoint's clients to
invest $638,768 in purported insurance company annuity contracts.
The Complaint alleges that the three insurance companies that,
according to Keypoint and Warren purportedly issued the annuity
contracts, have denied that Warren was an authorized agent to
sell their insurance products and that they issued annuity
contracts through Warren. Additionally, the Complaint alleges
that Warren and Keypoint misappropriated client funds by, among
other things, writing checks to themselves and to various
businesses that Warren controls.
Further, the Complaint alleges that from July 1991 through
at least December 1991, Keypoint, through Warren, offered and
sold real estate mortgage limited partnership units to two
clients, raising $45,000. The Complaint alleges that Warren and
Keypoint misappropriated client funds for the benefit of
themselves or their affiliated businesses. Finally, the
Complaint alleges that when Commission representatives attempted
to examine and inspect Keypoint's books and records relating to
its advisory business, Warren failed to respond or to produce
such documents to the Commission, as required by statute.